A potential blockbuster drug could potentially produce a blockbuster drug-delivery system, if the FDA follows a recommendation by its Endocrinologic and Metabolic Drugs Advisory Committee. The committee last month of the FDA gave its thumbs-up recommendation for the agency to approve Exubera, an inhaled form of insulin developed jointly by Pfizer (New York), Sanofi-Aventis (Le Plessis Robinson, France) and Nektar Therapeutics (San Carlos, California) for Type 1 and Type 2 diabetes treatment. The FDA’s final approval will make both the drug and the inhaler system developed by Nektar to deliver it big winners, since it is the first such system on the market.
According to analysts Exubera could produce sales of up to $10 billion annually. And Nektar could reap 10% to 20% as its percentage of sales and royalties, according to Joyce Strand, director of corporate communications for Nektar. Pfizer was the lead organization in financing Exubera development and will be its lead marketer; Sanofi-Aventis was the actual developer of the drug; and Nektar then transformed the bulk form of the insulin into a powdered product, created the packaging and then developed a special inhaler for its delivery, Strand told The BBI Newsletter.
There were two obvious critical development points in this effort for Nektar, Strand said. One was the engineering of powdered particles to the correct size. “Too small, they will come back up, like cigarette smoke,” she said. “Too big, they will lodge at the back of the mouth.” Secondly, was the need for an inhaler that would get these particles “into the deep lung and bloodstream to provide enough drug,” Strand said. She noted that compared with the common asthma inhaler, “We had to do something different,” referencing the fact that inhaled asthma drugs often are “wasted” by being caught at the back of the throat but don’t really need to get into the deep lung.
She described the Nektar device as “like a thin soda pop can that extends like a telescope. The extended part is a clear chamber so you can see whether you’ve taken a dose or not in a simple manner.” Pulling a handle on the device “compresses the air, forces the air through the powder and makes it into a fine powder.” Then, over a period of about 20 seconds, the drug can be inhaled and this “firing” process doesn’t have to be coordinated with breath intake, Strand said, again in contrast to an asthma inhaler.
Nektar was founded in the early 1990s “on the premise,” she said, of transforming drugs, normally injected, into inhaleable powders, and it partnered with Pfizer for the effort in 1995. Pfizer and Sanofi-Aventis then built a facility in Frankfurt, Germany, to manufacture the powdered form of the drug.
The large market opportunity is seen in the broader use of an inhaleable form of insulin as compared to the current injectables. Those with the more severe Type 1 diabetes – about 5% of the diabetes population – would still have to use basal injections but could supplement these with the inhaled Exubera. The much larger market of those with Type 2 diabetes could use the drug as their main form of insulin and use it earlier and more often. “By making this into an inhaleable drug, more patients will take more insulin.” Those with diabetes “don’t start insulin soon, mainly to avoid the needle,” she added. “And both Type 1 and Type 2 don’t take enough insulin to manage their disease.”
Still to come is FDA consideration and further examination of side effects sometimes produced by the inhaler delivery system: respiratory tract infections, cough and an inflammation called pharyngitis. Overall, panelists expressed concern that the long-term effects on those with lung diseases had not been determined. Panelists also expressed reservations about the device itself, whether it was too difficult to train users for proper use and maintenance. Company response to these concerns was that the device did require some extra learning but was significantly less complex – and much more user friendly – than the current required regimen of needle injections.
Going forward, Strand noted that Nektar is developing other forms of inhaleable drug/delivery systems. These include a drug to treat lung infections and cystic fibrosis, ready for a Phase III by Chiron (Emeryville, California), and a drug to treat migraine headache, in a Phase II trial with Solvay (Brussels, Belgium).
ArthroCare, S&N settle, enter accords
After a long line of lawsuits and countersuits dating back to 2001, ArthroCare (Austin, Texas) and Smith & Nephew (S&N; London) last month finally given their lawyers a rest and settled all legal disputes and entering into product supply and license agreements. Most recently, ArthroCare was seeking damages from S&N after it sued the maker of products used to repair joints, skin, soft tissue and bone in 2001, charging it with patent infringement. Last year, a federal court in Delaware barred S&N from selling the disputed products in the U.S.
As part of the settlement, S&N will be allowed to re-introduce its Saphyre bipolar RF and Electroblade electromechanical resector products into the U.S. market. These products enable surgeons to stop tissue from bleeding and to remove and modify soft tissue during arthroscopic surgery. On its side, ArthoCare will make bipolar and monopolar arthroscopy products for sale by S&N. Under the licensing pact, ArthroCare will receive royalties for bipolar products sold domestically by Smith & Nephew, and for bipolar shaver products sold by S&N worldwide. The company also said it was granted a license for the global sale of spine products.
Michael Baker, president and CEO of ArthroCare, said during a conference call that the arrangement was not a simple one to complete, but he was pleased that the litigation issues are behind the company. “This was not an easy deal to structure or complete and it required a lot of creativity from both parties.” He said the deal turns “an adversarial situation” into “an opportunity to work with one of the largest and best-regarded competitors to more rapidly make coblation a standard of care in more procedures and thereby improve the outcomes for literally tens of thousands of patients.”
In addition to product sales from the supply agreement and royalties, ArthroCare will receive a one-time cash settlement payment at signing and a series of related milestone payments over the next 12 months. ArthroCare’s products employ coblation technology, which uses low-temperature radio frequency energy to dissolve rather than burn soft tissue – minimizing, it said, damage to healthy tissue. Used in more than 4 million surgeries worldwide, Coblation-based devices have been developed and marketed for sports medicine; spine/neurologic; ear, nose and throat; cosmetic; urologic and gynecologic procedures. Baker said that the new partnership “will further solidify our position as the market share leader in the application of this technology and extend our global reach by leveraging Smith & Nephew’s broad distribution channels.”
S&N also was happy with the new peace accord. Jim Taylor, president of Smith & Nephew Endoscopy (Andover, Massachusetts), said, “Access to these products will allow us to offer our customers the most comprehensive range of arthroscopy products in the market.”
Joanne Wuensch, a medical technology analyst with Harris Nesbitt (New York), wrote in a research note that her firm views this announcement “as a positive for ArthroCare, relieving the legal overhang between the two companies, expanding the use of its gross-margin favorable Costa Rica manufacturing, and increasing its earnings potential.”
Looking ahead, ArthroCare forecast third-quarter revenue fitting within analysts’ current expectations, and total fiscal 2005 revenue between $210 million and $215 million. Analysts surveyed by Thomson Financial have set the high end of their third-quarter revenue estimates at $54.5 million, the low end at $52.1 million, with the mean estimate coming in at $53.3 million. For FY06, the company projected earnings per share between $1.25 and $1.35, on estimated revenue from $255 million to $265 million. The 2006 outlook includes the impact from the S&N deals.
Breast implant maker claims No. 3 spot
MediCor (Las Vegas, Nevada) reported that it has agreed to acquire two UK firms, Biosil and Nagor, with a combination of cash and stock, the specific financial terms not disclosed. Privately owned Biosil and Nagor sell medical devices on a worldwide basis. And Biosil and MediCor’s subsidiary, MediCor Aesthetics, are party to a supply agreement for saline-filled breast implants manufactured by Biosil and imported into the U.S. MediCor said that, with the two purchases, it now controls about 30% of the worldwide breast implant market, “excluding the U.S.”
Theodore Maloney, CEO of MediCor, said, “The acquisition of these companies, combined with our existing Eurosilicone breast implant product line, will further strengthen the position of MediCor as the third-leading manufacturer and distributor of breast implants worldwide, with Inamed and Mentor [both Santa Barbara, California] in first and second position worldwide.” He added that the acquisitions continue MediCor’s strategy “of assembling the most experienced management team and acquiring and expanding businesses in the global aesthetic, plastic and reconstructive and dermatology markets, continuing the process started with our acquisition of Eurosilicone in France in July 2004.”
Biosil manufactures silicone implants for the aesthetic, plastic and reconstructive surgery markets, including silicone gel and saline-filled breast implants, with both round and anatomical shapes and smooth or unique micro-textured surfaces. The company also makes a range of other silicone devices, including tissue expanders, testicular implants, gluteal implants, calf implants, facial implants and scar management products. Biosil also has developed products within the anesthesia and colorectoral disciplines.
Nagor currently is a supplier of the breast implant products made by Biosil in about 60 countries throughout Europe, Asia, South America and Africa.
Biosil has about 90 employees in its two ISO-certified manufacturing facilities, both of which have added production capacity, thus, MediCor said, enhancing its ability to meet increased product demand and support new product introductions. MediCor said it intends to retain the current Biosil and Nagor employee base and expand operations in Scotland, England and the Isle of Man. John Alsop will continue in the posts of president and managing director of Nagor.
The company said it would grow by expanding its business lines, primarily in the aesthetic, plastic and reconstructive surgery and dermatology markets, and through acquisitions. MediCor was founded by chairman Donald McGhan. In a statement, the company termed McGhan “the pioneer of the modern-day breast implant industry.” Its products are sold worldwide to hospitals, surgery centers and physicians through various distributors and direct sales personnel.